GOIH Capital Markets: Week's Strategy--08-26-07

1. We see:
   
   Biogen, (NASDAQ:BIIB) is showing positive signals for a risk arbitrage position. Carl Icahn purchased a 1% stake in the company and we see BIIB underpriced trading at 35x earnings. Biotechs traditionally trade at 60-70x earnings. We see upside in (BIIB). We will enter an arbitrage position for a takeout expectation.
   
   Japanese Yen:
   
   Our Capital Markets Group have conducted an internal analysis of the major Japanese exporters and have determined, for profitability estimates, the Yen is priced at 115/$. Accordingly, we see continued weakness in the Yen to improve the profitability of the Japanese exporters exporting to the USA and Europe as the yen weakens against the Euro also a carry trade possibility.
   
   The Japanese economy's growth rate is estimated at 1% against a 3-4% growth rate for the US economy. Therefore the Dollar should strengthen against the Yen, however, with the recent credit market seize up, the Fed is likely to cut the Fed Funds rate creating downward pressure on the Dollar against the major currencies of the world.
   
   Dow and Nasdaq:
   
   We see the Dow and Nasdaq moving higher this week as a one to one correlation with the weaken Yen. The Yen carry trade is financing the increase in equities in the US market. We see improvement in the Dow components with a large percentage of earnings outside the US.
   
   We see US consumer spending moving away from mortgage equity to credit cards increasing the profitability of Visa and Mastercard. We are monitoring for taking a position in both.
2. Dell Computers (DELL) we expect Dell to show higher sales on improved marketing now that Michael Dell has retaken the CEO post.
3. The S&P financials should do better as the largest component in the S&P 500 Index. If the market moves higher as we expect we will take positions in Goldman Sachs (GS), and increase our position in Bank of America (BAC).

Trades for the Week:

We will take a 100,000 share position in BIIB for short term trading profits.

1. We see the Yen continuing to weaken against the Dollar and will add to our position by another $200 million.
2. We see improvement in the QQQs and Dow futures. We will take positions in both indices.
   Visa and Mastercard positions will be opened during the week depending on trading patterns.
3. We see taking a position in Dell during the week for a short term trade.